Release Date: May 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Webjet Ltd (ASX:WEB, Financial) reported record levels in key metrics, with bookings up 21% to 8.7 million and TTV up 29% to $5.6 billion.
- EBITDA increased by 40% to $188.1 million, showcasing strong profitability.
- WebBeds, the B2B wholesaling business, saw a 39% increase in revenue to $327.9 million and a 39% rise in EBITDA to $162.4 million.
- The Webjet OTA business achieved record EBITDA margins and increased its market share, particularly in international bookings.
- The company maintains a strong cash position with total cash up $116 million as of March '23, and generated significant cash from operations.
Negative Points
- GoSee business showed only modest growth, with EBITDA at $1.7 million, impacted by supply challenges and lack of inbound tourism.
- Expenses increased by 38%, which, although in line with revenue growth, indicates rising operational costs.
- The Middle East market remains materially lower due to trading policies, affecting overall regional performance.
- The company expects a decline in TTV margins due to changes in business mix, which could impact future profitability.
- No dividend was declared for the full year, and the potential demerger adds uncertainty to future capital management strategies.
Q & A Highlights
Webjet Ltd (ASX:WEB) Earnings Call Highlights
Q: Can you give us a little bit of color in terms of the key region that's driving the outperformance in the WebBeds business? And is there an opportunity to go above the 50% EBITDA margin?
A: The key regions driving outperformance are APAC and North America. EBITDA margins are expected to remain at 50%, with revenue to TTV margin expected to decline due to mix changes. The focus is on achieving $10 billion TTV by FY30.
Q: Why did the OTA business seem to go backwards in terms of market share in the last six months of FY24?
A: In a challenging market with cost of living pressures and declining airfares, the focus was on maximizing EBITDA rather than pursuing market share growth.
Q: How should we think about the EBITDA growth for the OTA business in FY25?
A: EBITDA is expected to grow, with a focus on higher-margin international sales. Bookings growth will be modest, and TTV will be down due to lower airfares, but EBITDA will be up compared to last year.
Q: Can you clarify the expected effective tax rate going forward?
A: The effective tax rate is expected to be around 16% in the near term, up from 13.5% due to the introduction of corporate tax in the UAE and the proportionate earnings from WebBeds.
Q: How should we think about average booking values (ABV) in the B2B business, especially with the shift to international travel?
A: ABV is expected to remain flat, with marginal increases in some regions. The mix of bookings across different regions will influence the overall ABV, but no significant tailwinds from ADR or length of stay are expected.
Q: What impact will the 2024 Olympics have on your business, particularly in Europe?
A: No significant change in demand patterns is expected due to the Olympics or the European Championships. Bookings for June-July are in line with normal expectations.
Q: How are you thinking about potential capital management initiatives given the strong net cash position?
A: There are no immediate plans for capital management initiatives. The focus is on exploring the potential demerger and maintaining cash for possible inorganic growth opportunities.
Q: Will the demerger affect your role within Webjet?
A: No decision has been made regarding the demerger or the roles within the company. Any decisions will be communicated in due course.
Q: How sustainable is the above-market growth in the B2B business given the fragmented market?
A: The market remains fragmented, and there is ample room for above-market growth. The focus is on leveraging technology and innovation to drive growth rather than competing on price alone.
Q: What is the strategy for inorganic growth in the B2B business?
A: The focus is on tech-related innovations that provide unique capabilities and efficiencies. Large-scale acquisitions for market share are unlikely, as the company can achieve growth organically.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
